How much should you pay yourself?
You started your own business to do something you love and make money. But how much should you pay yourself? Too little and you may struggle to survive. Too much and your business might be at risk. So how do you strike the right balance?
Take the guesswork out of your salary
For many, the chance to set your own salary sounds like a dream come true. But small business owners know the reality is a little more complicated.
You should only pay yourself out of your profits – not your revenue. When you see money coming into your business, don’t assume you can pay yourself a big slice of that. Before you take your cut, you also need to take account of things like taxes, payroll, fixed costs and overheads.
will really help you work out how much you can afford to pay yourself. It will let you keep track of all expenses and calculate profit rather than revenue or turnover. It will also help identify areas you can make tax deductions.
Setting your own salary will depend on your location, your industry, your profits, and how much you want to earn. But there are a few things to think about that can help you land on a reasonable figure.
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